World

Recovering Swiss economy stumbles in fourth quarter

ZURICH (Reuters) - Switzerland's economy stumbled in the fourth quarter of last year as exports fell, growth data showed on Thursday, though evidence of an upturn going into 2014 suggests the recovery remains on track.

Quarter-on-quarter gross domestic product growth was 0.2 percent, the State Secretariat for Economic Affairs (SECO) said in a statement on Thursday - lower than a forecast for 0.4 percent in a Reuters poll and the previous quarter's 0.5 percent.

Consumption, supported by low unemployment and a high rate of immigration, and investment in construction helped to prop up growth.

But that was offset by a 1.7 percent fall in exports of goods, with a decrease in chemical and pharmaceutical products weighing in particular, the SECO said.

Despite the blip, economists said the longer-term trend was still one of growth, a view supported by recent trade and manufacturing data from January.

"It is the worst quarterly showing since the second quarter of 2012 and compares unfavourably with current leading indicators such as the continually improving KOF," Tony Nyman at Informa Global Markets said.

"However, the data overall shows an economy continuing its slow growth and perhaps to be further supported in 2014 by the tentatively improving economic picture in the euro zone."

Thomas Gitzel, chief economist at VP Bank Group, said the good news was that company investment was up. "This trend should continue in 2014," he said.

Swiss exports grew robustly in January, data showed last week, supported by a strong rebound in sales of chemicals and pharmaceuticals and helped by buoyant demand from North and Latin America.

Exports have been supported by a cap the central bank (SNB) imposed on the soaring franc currency in 2011, but have suffered from sluggish demand in Europe.

Switzerland's manufacturing sector also accelerated in January, while consumer prices inched up for a third month running on an annual basis, adding to signs that deflation pressures are easing.

SNB Vice-Chairman Jean-Pierre Danthine told a Swiss newspaper this month the central bank would only consider scrapping its cap against the euro if inflation came in much higher and there was less upward pressure on the franc.

Year-on-year, gross domestic product rose 1.7 percent, also missing forecasts for an increase of 2.0 percent and down from a revised 2.1 percent growth in the previous three months, the State Secretariat for Economics said.

In December, the SNB forecast economic growth of 1.5-2.0 percent in 2013 and around 2.0 percent in 2014.